Keating & Costello, compare and contrast

Paul Keating is talking more economic sense than any of our current crop of pollies. He gets better with age.

Former prime minister and treasurer Paul Keating says fiscal stimulus is reaching its limits and even advanced nations are at risk of debt default if they continue to amass huge budget deficits and borrowings to rescue their economies.”There is a limit to what fiscal policy can do simply because there is a limit to fiscal policy,” Mr Keating told a Lowy Institute gathering in Sydney on Thursday.

ABC News – Top Stories – Breaking news from Australia and the world
Well worth a read and some great comments. From ArgusTufft:

Interesting the comment about Keating being a “neo-liberal” for in the true meaning of liberal this is the philosophy of the current Labor Govt and certainly was of Keating’s Govt.

The real problem is that our Aust Liberal Party has been not following “liberal” policies and philosophy for many decades, especially under Howard & Costello (& most certainly Abbott). They should really be named “The Tory Party” or “Conservatives” or “Imperialist Party” – something along those lines. But …

There is some hope under both Turnbull and to give him his due, the previous leader Brendan Nelson, that the Liberals could live up to their “Liberal” name further down the track. No hope for Joe Hockey however or Julie Bishop, they are tarred in indellible “Tory” paint.

Meanwhile, elsewhere on the planet, poor old Pete is still fighting the last war, back when he was the World’s Greatest Treasurer and Australia was the best little whorehouse in Texas.

Filed under: Big Picture, Economics, Politics , Fiscal Stimulus, PaulKeating, Peter Costello

Why have we become so suspicious of kindness?

St Lawrence distributing alms: fresco by Fra Angelico (1447-1449) Photograph: /Corbis

This turned up on a couple of blogs last week and struck me as one of the freshest insights I’ve read in a while.

Kindness has gone out of fashion. In the age of the rampant free market and the selfish gene, compassion is seen as either narcissism or weakness. So why have we become so suspicious of one of our most basic – and pleasurable – human qualities, ask Adam Phillips and Barbara Taylor

Love thy neighbour: Why have we become so suspicious of kindness? | Books | The Guardian

Filed under: Big Picture , Kindess

OECD regulation call

OECD regulation call trumps Rudd

Filed under: Big Picture, Economics , Cartoons, Humor, OECD

The global economy needs global regulation

Only fools and faith-driven free-market ideologues accept the notion that banks and financial markets should be unfettered by regulation. We have accepted the ‘inevitability’ of a global economy, so it is reasonable and logical to have an efficient and effective global regulatory framework.

This is the enormous challenge facing the G20 summit. Of course, achieving such a framework will be the hard part, but hopefully we will see the recognition that an effective global regulatory framework is the way forward.

Filed under: Big Picture, Economics , G20

Free Market Fundamentalism

From The Age today:

“THE belief that markets tend towards equilibrium has given rise to policies which seek to give financial markets free rein; I call these policies market fundamentalism, and I contend that market fundamentalism is no better than Marxist dogma,” declares billionaire George Soros, in his book The New Paradigm for Financial Markets.

Part of the new paradigm, Mr Soros writes, is that “instead of always being right, financial markets are always wrong”. That is, investors and regulators are acting on an imperfect understanding of what is really happening in the market. Those imperfect understandings have paved the way for the current crisis.

Years ago, the rationale for the growth in new types of derivatives and credit swaps was that they would help spread or hedge against risks. Mr Soros dismisses the possibility.

“The idea that risk management can be left to the participants was an aberration,” Mr Soros writes. And only ideology, one as rigid and oversimplified as market fundamentalism, could support the notion that markets can self-regulate.

At the centre of our financial troubles is the mistaken belief that markets tend towards an equilibrium, an article of faith among free market economists.

Markets don’t tend towards equilibrium, Mr Soros writes. Instead they cannon from one unique historical event to the next. Market activity gets caught up in an initially self-reinforcing but eventually self-defeating process, which almost invariably leads to crises, he writes.

“Boom-bust processes arise out of a reflexive interaction between a prevailing trend and a prevailing misconception,” the billionaire philanthropist writes. He believes the “reflexivity” stems from the fact “people’s understanding is inherently imperfect because they are part of reality and a part cannot fully comprehend the whole”.

Another prevailing misconception is that the economics of markets are a science, he writes.

“In order to establish and protect the status of economics as a science, economists have gone to great lengths to eliminate reflexivity from their subject matter … it was a mistake to model economics on Newtonian physics.”

For markets and regulators, the certainty of economics has actually slowed effective responses to crises over the past three decades.

Ya think? Who would have imagined such heresy was possible even one year ago. How times change!

Love this quote “Another prevailing misconception is that the economics of markets are a science.” Judging by local freemarket enthusiasts I would have thought it was more a religious thing – God’s Natural Law.

Filed under: Big Picture, Economics , FreeMarket Fundamentalism, George Soros, The New Paradigm for Financial Markets

God is Green

Film-maker Mark Dowd travels the world to question religious leaders as to why faith, the greatest motivator of man, is doing so little to confront the devastating problem of climate change. He discovers that especially in the US systematic efforts by AGW campaigners are winning over many evangelical churches and their congregations, and such will campaigns will be instrumental in effecting climate change policies.

Skeptics and deniers will be outraged, and very, very afraid.

Filed under: Big Picture, Environment, Politics , Climate Change, God is Green

Bye Bye Bushites!

ABC Onine

Praise the Lord and pass the whiskey! The election of Barrack Obama to President of the United States marks the end of the toxic neocon dream – we don’t react to reality – we create reality.  The Bush Administration has been the most grotesque in US history. The foxes had finally taken over the hen-house. It was bound to end in tears, and so it has. To use some Bushite vernacular – it has been the mother of all clusterfucks.

I cannot recall a single redeeming feature of the Bush Administration, let alone three. The littany of policy disasters is mind boggling both in extent and all-encompassing range. Begun by stealing the 2000 election, to the cronyism of putting Monsanto in charge of the EPA and Halliburton in charge of the administration. Deficit creating tax cuts for the uber-wealthy – the golden boys and girls of the ponzi financial schemes and scams. Two ill-advised and botched invasions which have done nothing but breed support for Al Q’aida and run up trillion dollar budget deficits. Hurricane Katrina. The failure to plan for energy efficiency, preferring instead to wage war on oil rich dictatorships under the guise of spreading democracy and liberation, all the while enriching the coffers of Halliburton and Bush’s oil cronies. The cultivation of Christian Fundamentalists within the Administration and lobby industry while undermining the fundamental principles of the US constitution in the name of an apocalyptic Never-Ending War on Terror.

All finished off with the mother of all financial distasters when the ponzi schemes collapsed – products of the great freemarket experiment allowing the proliferation of unregulated financial systems that no-one really understood. The undoing of which almost resulted in a global meltdown, narrowly averted only by massive injections of liquidity from the public purse.

No doubt the challenges facing the Obama administration are monumental and no doubt Obama will fall short of people’s expectations. But as one commentator put it, there has been a change in chemsitry – too subtle to measure on any grid, but with profound long term effect. I think he will have a steadying and restorative influence. He possesses a noble demeanour – a refreshing change from the arrogance, ignorance and ignominy of the last eight years.

Yet, at this moment, I welcome the death of the neocon fantasy. Game over. That creaking sound you hear is the prevailing paradigm from the time of Ronald Reagan shifting to a neo Keynesian era.

Nor do I shed tears for the Bushites and their local acolytes. Rupert Murdoch and his tame tabloid attack dogs, Howard and the Howardians, the obsequious punditariat and countless other spotted Herberts who looked the other way in return for prestige and easy money leached from the blood sweat and tears of world’s less fortunate.

Good riddance.

God bless America!

Filed under: Big Picture, Economics, Politics , Barrack Obama, Bushites, Neo Keynesian

Is Green the new Red, White and Blue?

Driving home on the Great Ocean Road this afternoon I heard a ripping conversation between Thomas Friedman and Philip Adams. Well worth a listen for a straight-shooting analysis of economics and the realities of survival in an overcrowded environment and our toxic addiction to growth that has lead to petro-authoritarianism. Friedman was highly amused by Adam’s reference to the USSA.

US author and columnist Thomas Freidman has won three Pulitzer prizes, his last book, The World Is Flat, was an international bestseller. In his new book he argues green politics has to be re-branded in the US, so that it is no longer the sole domain of liberals, but is something every red, white, and blue NASCAR Dad and Soccer Mom sees as patriotic and essential.

Thomas Friedman: Hot, Flat and Crowded – Late Night Live – 13 October 2008

Filed under: Big Picture, Economics , TheFuture, Thomas Friedman

Risking Our Kids

All those narcissistic whingers writing to the papers complaining about the inequity of childess taxpayers subsidising paid parental leave should have a listen to what Fiona Stanley has to say about the health of our children and the social and economic implications it has for our future.

Following Fiona Stanley and her team of scientists from their cutting edge laboratories to remote Aboriginal communities and into increasingly wealthy but unhealthy homes around Australia this film builds the case for what is being called the “the modernity paradox”. Can it be that our contemporary western lifestyle is delivering a toxic physical and social environment in which children are growing up sick?

Risking Our Kids, the first of ABC’s Future Makers series, will not be comfortable viewing for free market deregulation progress-at-any-cost junkies.  Stanley lays responsibility for the health crises among the young people of the world at the feet of Teh Global Economy. She warns that if we don’t act to turn it around we face a future in which 25% of the adult population will be unable to participate in the economy and will be an economic burden on our national capacity.

So much for dickheads like former Federal Health Minister Tony Abbott defending the right of junk food corporations to profit from advertising their wares to young children. So much for those who hapily degrade the quality of community and family life in the pursuit of excessive and unsustainable levels of material affluence.

Check it out if you’re not afraid to have your complacency challenged.

Filed under: Big Picture , FionaStanley, Health

Economic opportunity and the ETS

Malcolm Turnbull gave a creditable performance on Lateline last night as he stabilised the Opposition’s hitherto shambolic stance on climate change and an emissions trading scheme. Turnbull has returned the Opposition to its policy stance enunciated during the death throes of the Howard government – with the caveat that they’d like to delay it another year.

Turnbull wholeheartedly endorses the need for an ETS, so the remaining quibbles concern when it should be introduced and the rate at which it kicks in once it’s started. 2012 is probably soon enough, according to Turnbull, who repeatedly reminded us that an ETS is ‘very complicated’. In other words, he is trying to buy time and concessions on behalf of the big emitters in the Australian economy. As I’ve said before, an ETS can’t be that difficult. As suggested on last night’s premiere of The Hollowmen, you can go the full policy monty in 18 months, so 2010 is definitely do-able.

The Opposition is ever keen to focus on the costs imposed by an ETS, as if there will only be negative impacts for the economy – ‘we don’t want to get too far ahead of the pack’. While details remain to seen, it is likely that the initial imposts for the individual will be in the order of a few hundred dollars a year – less than the impact of a tax cut foregone – which the electorate is largely prepared to wear, as long something is done. The biggest losers will be the extractive and fossil fuel industry Corporations, and even they will either be given generous concessions or pass the costs on to consumers wherever possible. It is this interest group that Malcolm is representing with the ‘hasten slowly’ warnings.

Yet this week’s G8 meeting gives symbolic encouragement to the notion of Global action on emission reduction. One likely outcome of the 2008 US Presidential election will be a commitment to a US ETS which will be legislated sooner rather than later, whomever wins. Last year the Global ETS market was worth about $64bn, according to the World Bank, more than doubling from $31bn in 2006. That value would soar to more than $3,000bn a year by 2020 if the US introduced carbon trading.

The world is moving closer to a global ETS. With the US on board, it will become increasingly difficult for India and China (who are both signatories to the Kyoto Agreement) not to do likewise, especially in the face of their customer economies imposing carbon tariffs on Chinese products.

So where does all this leave Australia? If there was the likelihood of a rapidly expanding global market for say, coal or iron ore, our businesses would be gearing up for it post haste, years in advance, in order to cash in on the boom. Yet the Opposition want us to drag our feet until we see what everyone else does first. At the least, there will be massive profit opportunities in the Carbon market for our market traders, but more significantly there will be a booming global market for carbon-neutral technologies (even ‘clean’ coal). Given our history of innovative invention – carbon-neutral technology is an ideal economic opportunity for Australian businesses to prosper, which might also go some way to ameliorating our worsening trade deficit.

That is the misfortune of all this dithering, dallying and delaying on behalf of the fossil industries. Australia is missing out on transformative opportunities presented by the inevitability of a global ETS. The sooner we get on with it, the better off we’ll be as a nation. We don’t hear the Liberals, the self-appointed proponents of business and the economy, talking about the opportunity costs involved in further delay.

But then again, we never were really that good at the entrepreneurial side of business – unless it involved digging stuff up, growing stuff or chopping stuff down and selling it the highest bidder with as little effort as possible. Value adding? Down-stream processing? What’s that??

Filed under: Big Picture, Economics, Environment, Politics , Emissions Trading Scheme, Malcolm Turnbull